RBS Capital Resolution Group Rory Cullinan, CEO, RBS Capital Resolution Group Goldman Sachs European Financials Conference 11 June 2014
Did Non-Core achieve its goals? Funded Assets, £bn -230 Run-off 258 £110bn Disposals 201 £94bn Impairments 138 £25bn 93 FY13 57 28 40 <35 Forecast Original Forecast Revised 2008 2009 2010 2011 2012 2013
Where is RBS on its balance sheet journey? Funded Assets, £bn Citizens divestment RCR run-down W&G divestment Non-CRG reduction 1 1,563 740 Capital Resolution Group accounts for c.66% of reduction c.600 Highest 2013 2016-17 point target (Dec 2007) 1 Markets and International Banking deleveraging 2
Why did RBS establish Capital Resolution Group (CRG)? ≥3.4% >12.0% 9.4% 8.6% 4.5% RBS CET1 RWA, £bn c.300 414 429 -30% 609 Worst Point FY13 Q114 FY16 target (FY07) 3
Is RBS Capital Resolution (RCR) the same as Non-Core? £bn +76% 65 51 39 39 37 RWAe (11) 29 28 24 Funded Assets 13 (12) Non-Core Transfer RCR FY13 Q1 14 Core FY13 to Core transfer to RCR RWAe (RWA equivalent) include RWA equivalent of capital deductions 4
CRG is the key component of our capital plan RWAe, £bn Rest of RBS Shipping (excl RCR) W&G RCR 41% Forecast CRG 30% reduction Citizens Jun-13 Dec-13 Dec 16F 5
Q&A
Forward Looking Statements Certain sections in this presentation contain ‘forward - looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘believes’, ‘should’, ‘intend’, ‘plan’, ‘could’, ‘probability’, ‘risk’, ‘Value -at- Risk (VaR)’, ‘target’, ‘goal’, ‘objective’, ‘will’, ‘endeavour’, ‘outlook’, ‘optimistic’, ‘prospects’ and similar expressions or variations on such expressi ons. In particular, this presentation includes forward- looking statements relating, but not limited to: the Group’s restructuring and new strategic plans, divestments, capitalisation, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets (RWAs), return on equity (ROE), profitability, cost:income ratios, leverage and loan:deposit ratios, funding and risk profile; discretionary coupon and dividend payments; implementation of legislation of ring-fencing and bail-in measures; sustainability targets; litigation, regulatory and governmental investigations; the Group’s future financial performance; the level and extent of future impairme nts and write- downs; and the Group’s exposure to political risks, including the referendum on Scottish independence, credit rating risk and to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price risk. These statements are based on current plans, estimates and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. For example, certain market risk disclosures are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated. Other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this presentation include, but are not limited to: global economic and financial market conditions and other geopolitical risks, and their impact on the financial industry in general and on the Group in particular; the ability to implement strategic plans on a timely basis, or at all, including the simplification of the Group’s structure, the divestment of Citizens Financial Group and the exiting of assets in RBS Capital Resolution as well as the disposal of certain other assets and businesses as announced or required as part of the State Aid restructuring plan; the achievement of capital and costs reduction targets; ineffective management of capital or changes to capital adequacy or liquidity requirements; organisational restructuring in response to legislation and regulation in the United Kingdom (UK), the European Union (EU) and the United States (US); the implementation of key legislation and regulation including the UK Financial Services (Banking Reform Act) 2013 and the proposed EU Recovery and Resolution Directive; the ability to access sufficient sources of capital, liquidity and funding when required; deteriorations in borrower and counterparty credit quality; litigation, government and regulatory investigations including investigations relating to the setting of LIBOR and other interest rates and foreign exchange trading and rate setting activities; costs or exposures borne by the Group arising out of the origination or sale of mortgages or mortgage-backed securities in the US; the extent of future write-downs and impairment charges caused by depressed asset valuations; the value and effectiveness of any credit protection purchased by the Group; unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices and basis, volatility and correlation risks; changes in the credit ratings of the Group; changes to the valuation of financial instruments recorded at fair value; competition and consolidation in the banking sector; the ability of the Group to attract or retain senior management or other key employees; regulatory or legal changes (including those requiring any restructuring of the Group’s operations) in the UK, the US and oth er countries in which the Group operates or a change in UK Government policy; changes to regulatory requirements relating to capital and liquidity; changes to the monetary and interest rate policies of central banks and other governmental and regulatory bodies; changes in UK and foreign laws, regulations, accounting standards and taxes, including changes in regulatory capital regulations and liquidity requirements; impairments of goodwill; pension fund shortfalls; general operational risks; HM Treasury exercising influence over the operations of the Group; reputational risk; the conversion of the B Shares in accordance with their terms; limitations on, or additional requirements imp osed on, the Group’s activities as a result of HM Treasury’s investment in the Group; and the success of the Group in managing the risks involved in the foregoing. The forward-looking statements contained in this presentation speak only as of the date of this announcement, and the Group does not undertake to update any forward- looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. 6
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